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Determinations Not Out Of Time Following Fraud By Employee

By Mark McLaughlin, September 2014
Fraud by an employee could be attributed to the employer company for the purposes of extending the statutory time limit to assess the resulting loss of PAYE tax and NIC.

The first appellant (I Ltd) appealed against PAYE assessments (under the Income Tax (Pay As You Earn) Regulations, SI 2003/2683, Reg 80) and National Insurance contributions (NIC) determinations (under the Social Security Contributions (Transfer of Functions, etc) Act 1999, s 8) for 1997/98, 1998/99 and 1999/00. 

The issue in I Ltd’s appeal was whether the determinations of unpaid PAYE and NIC were out of time. An employee of I Ltd had fraudulently diverted monies from the company, which were intended for HM Revenue & Customs (HMRC), to himself. HMRC received forms P35 submitted on behalf of I Ltd for 1997/98, 1998/99 and 1999/00. They had been falsified and understated the amount of tax due, and had not been signed by the managing director of I
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